New forecast from the NRF projects retail growth will slow in 2019

This story was delivered to Business Insider Intelligence "E-Commerce Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here.

The National Retail Federation (NRF) has released its forecast for the US retail market in 2019, projecting it to grow between 3.8% year-over-year (YoY) and 4.4% YoY. Business Insider Intelligence

This would bring the industry's total sales to over $3.8 trillion for the year. Despite the high number of total sales, this would actually represent a deceleration in retail sales growth, as preliminary estimates peg 2018's growth at 4.6% YoY. This would mean that 2019 fails to build on the back-to-back years of acceleration seen by retail sales.

The slight projected drop in sales growth is likely due to factors like the ongoing trade war between the US and China, as well as concerns about a recession. Some retailers have been able to dodge the effects of the trade war and its tariffs thus far by planning ahead, but it can't be avoided in the long term.

So, unless the tariffs are lifted — which is a possibility— retailers have to decide how much of the increased costs they want to eat themselves in 2019, and how much they plan to pass on to consumers, all of which can drive sales numbers down. The trade war and effects of the government shutdown have also raised concerns about a potential recession, which would surely hurt retail's performance.

But the NRF doesn't seem overly concerned about these issues. NRF President Matthew Shay said the NRF believes "the underlying state of the economy is sound" and cited increased employment and income as well as lower taxes as reasons why. All of this can help the economy weather tariffs and other adverse conditions.

And considering the NRF's original forecast for 2018 growth was between 3.8% YoY and 4.4% YoY — identical to its 2019 forecast — but it later boosted the estimate to 4.5% YoY or more in August, it's certainly possible it'll do the same in 2019 and sales growth will accelerate yet again.

Retailers, on the other hand, appear to be concerned about both their current status and the future of retail.The majority (54%) of C-suite retail executives said that their companies are just surviving, meaning they're stable and breaking even, and 9% believe they're struggling, suggesting they're unprofitable and/or losing to competitors, according to a survey from BDO.

So, even while retail growth accelerates, most retailers aren't performing very well. And 44% of all retailers are actively preparing for a market correction, so many companies aren't optimistic about the future. It remains to be seen if these retailers' cautious outlook or the NRF's more positive view will win out, but it's clear there's significant uncertainty concerning the present and future of the retail market, despite its recent strong performance.